(CNN) -- Billionaire oilman T. Boone Pickens is sinking billions of dollars into a new wind farm in Texas. It is likely to become the biggest in the world, producing enough power for the equivalent of 1.3 million homes. CNN's Ali Velshi asked the oil legend why he thinks wind could be the answer to this country's energy problems:

Ali Velshi: Tell me about the wind. Now, you are buying, for a start, more than 600 wind turbines from General Electric. You're going to put them on this big tract of land in Texas, and you're going to generate a lot of electricity.

What happens to that electricity? Tell me where you think you're going to make your money and how this is going to help the situation in America.

T. Boone Pickens: Well, that's the first step to a 4,000-megawatt wind farm. This is 1,000 megawatts.

We start receiving those turbines in mid 2010. We will have the total 4,000 megawatts finished by the end of 2015. That power will go into a transmission line that will tie into the Electric Reliability Council of Texas system in the state of Texas, and it will be transmitted downstate. Watch why Pickens is willing to spend billions on wind »

Velshi: What's your view of wind power? It's one of several things that we should be looking at in terms of powering our homes, electrical power? We get most of it from coal and natural gas, and some from nuclear. Are you thinking it's one of the formats of power we should be thinking about, or is this going to be bigger than we all thought?

Pickens: The Department of Energy came out with a study in April of '07 that said we could generate 20 percent of our electricity from wind. And the wind power is -- you know, it's clean, it's renewable. It's -- you know, it's everything you want. And it's a stable supply of energy.

It will be located in [the] central part of the United States, which will be the best from a safety standpoint to be located. You have a wind corridor that goes from Pampa, Texas, to the Canadian border. And it has -- the wind, it's unbelievable that we have not done more with wind. Look at Germany and Spain. They have developed their wind way beyond what we have, and they don't have as much wind as we do. It's not unlike the French have done with their nuclear. They're 80 percent power generated off of nuclear, we're 20 percent.

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Velshi: I'm fascinated by wind power. I love going by a field of these turbines. And I think they're fascinating.

You don't happen to think they're attractive, and you're not really putting them on your land. You're going to be using other people's land to put these things on.

Pickens: That's right. And it's very clear, these are my neighbors. And they want them. It generates income for them.

A turbine will generate somewhere around 20,000 [dollars] a year in royalty income. And on a 640-acre tract, you can put five to 10 of these on the tract. And you don't have to have them if you don't want them.

Velshi: And it's quite common that people who maybe have a piece of land, they might be farmers or something like that, this is extra income to them by making a deal with somebody like you who is going put these things up, if they don't mind having them on the land. Do they get the electricity from it or do they just get a royalty check?

Pickens: A royalty check. But look at Sweetwater, Texas. That town was 12,000 people, then went down below 10,000. The wind came in, it's above 12,000 in population now. The local economy is booming.

That can be repeated over and over and over again all the way to the Canadian border. Then you have a solar corridor that goes from Sweetwater, Texas, west to the West coast, and that solar corridor can also be developed.

But we are going to have to do something different in America. You can't keep paying out $600 billion a year for oil.